Upfront: Economic Incentives, Tax Credits Go Unused

Although they're focused on cutting costs, companies are leaving money on the table when it comes to real estate decisions, according to a KPMG LLP survey of 205 senior corporate tax and real estate professionals in automotive, banking, retail and consumer products companies.

Although survey respondents reported that they have lately been increasing their use of economic incentives and tax credits from state and local governments for expansion, consolidation and relocation activities, the majority still believe they have not realized many of the benefits available to them.

The primary reason for these missed opportunities, according to KPMG, is that responsibility for tax credits and incentives is often fragmented within a company. The survey revealed that 79 percent of companies have assigned responsibility for credits and incentives to multiple people in various areas of the organization.

Still, 55 percent of survey respondents feel that incentives and tax credits play a critical role in their strategic decisions about expansion, relocation and geographic consolidation. The benefits are particularly important in choices related to capital expenditures (35 percent of respondents), real estate portfolio management (30 percent), mergers and acquisitions (30 percent), business expansion (28 percent), and business relocation (28 percent).

At present, all 50 states offer some kind of economic incentive or tax credit to companies that choose to expand or relocate within their borders.